Changes in earnings announcement tone and insider sales

Isho Tama-Sweet

Advances in accounting, 2014, vol. 30, issue 2, 276-282

Abstract: The evidence from prior literature suggests that insider trading is related to firms' reported financial results and disclosure choices. I contribute to the literature by examining the association between narrative disclosure in earnings announcements and insider trading. Specifically, I hypothesize and find a positive association between changes in the optimistic tone of earnings announcements and CEOs' subsequent equity sales. In addition, I hypothesize and find that this relation is mitigated by the Sarbanes–Oxley Act and litigation risk. CEOs' financial gain from selling equity after more optimistic earnings announcements is small relative to their total compensation.

Keywords: Optimistic tone; Earnings announcements; Insider trading (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:advacc:v:30:y:2014:i:2:p:276-282

DOI: 10.1016/j.adiac.2014.09.006

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